Foxconn To Reduce Its Workforce Due To Shrinking Revenue Growth [Updated]

Foxconn, the lead assembler of iPhones, has revealed that it is planning on to reduce its workforce by quite some margin due to decreasing demand and sinking retail prices of tablets and smartphones in the market, as reported by Reuters Tuesday.

It is quite understandable because Foxconn’s employs over 1.3 million workers when the production is at its peak, but with the lack of growth in demand, the reduction in employees was very much on the cards. The number of employees especially see a rise whenever a new iPhone or iPad is about to go on sale, which is why the company is one of the largest private firms in the world.

The company has been growing for the past few years due to certain increase in growth of tablets and smartphones market. The credit of this growth should also be given to Apple which has stayed in huge demand for quite some time now. However, as mentioned above, the growth in the market is slowing down, which is why the workforce will have to be cut.

Special assistant to the Foxconn chairman and group’s spokesman, Louis Woo noted that labor costs had more than doubled since the year 2010.

We’ve basically stabilized (our workforce) in the last three years,” Woo said. When asked if the company plans to reduce overall headcount, he responded “yes.”

Revenue growth of Foxconn has been in double digits from 2003 to 2012, but since the last couple of years, the company has been experiencing growth slips. The prices have been coming down and the company will have to accept it whether they like it or not.

To stay in the market, it will need to let go of some of the employees, so that the company can stay afloat even in the slow growth period. Woo stated that even with the ever growing information technology industry, the prices will eventually come down and Foxconn has to accept that.

It was reported back in summer of last year that Foxconn is planning on to replace the human workforce with robots as they are autonomous and use mechanical arms to perform the tasks that are relatively simple and can be done without too much of a hassle.

Update: Foxconn has issued an official statement saying that the claims of workforce reductions are “completely inaccurate and totally without foundation,” adding that the company is still recruiting employees. According to a company spokeswoman:

As we continue to increase the application of automation in our operations, the magnitude of our employee recruitment is expected to decrease in the years ahead, but we have no plans to reduce our workforce numbers now or anytime in the future. In addition, our company is confident that we will continue to achieve sustained business growth in the years to come.